Electric Vehicle Tax Benefits and Subsidies Removed
Fossil Fuel Regulations Abolished and Investment Expansion Announced
Korean Companies Increasing US Investment Expected to Suffer
IRA Investment Effects Concentrated in Republican Strongholds
"Trump Unlikely to Fully Repeal IRA"
Former President Donald Trump is reportedly planning to completely repeal the Inflation Reduction Act (IRA), a core policy of 'Bidenomics' (Joe Biden + Economics), if he succeeds in regaining the presidency in the U.S. election next November. Global companies, including South Korean firms that have significantly increased investments expecting IRA tax and subsidy benefits in the event of Trump's election, are expected to suffer losses.
According to major foreign media on the 22nd (local time), the Trump campaign stated that if they succeed in a second term, they will conduct a full review of the U.S. climate and energy policies. In particular, the IRA, which includes $369 billion (approximately 480 trillion KRW) in tax and subsidy benefits, is set to be immediately put on the operating table. The new energy policy is expected to focus on deregulating the fossil fuel industry, expanding investments, and withdrawing subsidies for electric vehicle transitions.
A senior official from the Trump campaign said, "We will maximize fossil fuel production," adding, "The price tag related to the IRA has been severely underestimated. We are considering a large-scale spending triangle."
Introduced in August last year, the IRA is a bill that provides substantial tax and subsidy benefits for electric vehicles assembled in North America. It is also considered one of President Biden's greatest achievements alongside the CHIPS and Science Act (CSA). However, former President Trump has opposed the IRA, calling it "the largest tax increase in history." He argued that the Biden administration's renewable energy expansion policies undermine his own policies aimed at U.S. energy independence and controlling gasoline price increases. Recently, in a campaign video, Trump criticized, "American energy relies on wind power, which is vulnerable, poor, and expensive," and added, "Wind turbines rust, corrode, and kill birds."
The stark differences between the two former presidents regarding the direction of U.S. energy policy have increased future policy uncertainties. While President Biden is accelerating carbon neutrality by expanding renewable energy adoption, former President Trump has pledged to repeal regulations on fossil fuel use.
The 'Project 2025' report by the Heritage Foundation, a right-wing U.S. think tank and a draft of Trump's second-term manifesto, includes plans to dissolve many agencies responsible for implementing Biden administration's energy policies, including the loan program office supporting $400 billion (approximately 520 trillion KRW) for decarbonization industries.
If former President Trump succeeds in next year's re-election, it is expected that global electric vehicle and battery companies, including those from South Korea, which have been rushing to expand U.S. investments anticipating IRA benefits, will inevitably suffer losses. The White House recently announced that since the Biden administration took office in January 2021, $200 billion (approximately 260 trillion KRW) in investments have been made in the U.S. from the Asia-Pacific region, with South Korean companies accounting for at least $55.5 billion (approximately 72 trillion KRW), more than a quarter of the total Asia-Pacific investment.
Currently, American voters' preferences are leaning toward former President Trump, making it highly likely that IRA tax and subsidy benefits will be repealed or significantly reduced. According to a presidential poll released yesterday by Emerson College, in a hypothetical two-person race, former President Trump leads with 47% support over President Biden's 43%.
However, some opinions suggest that even if former President Trump wins re-election, it would be realistically difficult to completely repeal the IRA. This is because the investment and employment effects of the IRA are concentrated in Republican-leaning areas, making it hard to gain congressional approval for its repeal.
Dan Brouillette, who served as Secretary of Energy under the Trump administration, said, "Former President Trump will prove to be much more moderate than some environmentalists fear if he succeeds in a second term," adding, "The next Republican president will recognize that the positive aspects of the IRA must be maintained." He further noted, "The IRA includes incentives to continue nuclear power development, which fully aligns with former President Trump's policies and is expected to continue."
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